Quote:The idea is planning and saving. Think you might want to buy a large ticket item such as a vehicle, home, etc.? The best thing to do is save up money for it. If you don't quite have enough to cover the purchase, at least have enough to cover the depreciation of it (in this case of a vehicle). Then if you do need to finance the balance, a credit union will typically offer better rates and/or payment options.


One thing that I did that floored a dealership one time. They offered a discount on a vehicle ONLY if you used their financing. Let's just say that the vehicle cost after the discount was $35,000.00. I wrote them a check for $28,000.00 as a down payment and told them that I wanted to finance the remaining $12,000.00. Of course, I paid the "loan" off when the first payment came due. The figures are just an example and not the actual figures that we dealt with.


One other thing that I advise against. NEVER pay for credit life and/or gap insurance on a vehicle and NEVER pay for the "special coating" or extended warranties that they offer.

I disagree with this. Depending on the person buying the vehicle and the amount they have up front these services can be of great need.


I'm a former underwriter for a local credit union and I can't tell you how many [BLEEP] stories I've heard from the origination side when a elderly couple living off of social security loses their spouse due to age and they are stuck with a $300 car note with 4 years left on it and can't afford to pay it with only one social security income. I've heard the same number of stories where a young person purchased a new vehicle with no down payment and totaled the car a couple months later and are left with a bill because the insurance wouldn't cover the entire cost of what was left on the loan.


In each instance if the elderly couple would've had the credit life protection the entire loan note would've been paid off and the surviving spouse would've been left with a car paid for free and clear. If only the young person would've purchased the $350 gap coverage the remaining balance of their loan would've been paid off and they could shop for a new vehicle without a $3000 bill sitting on their coffee table.


It just depends on each person. If you have a decent life insurance policy or you put down a decent enough down payment up front then I agree these services won't do you any good. But in today's world the majority of people don't have a life insurance policy big enough to cover the remaining balances on large purchases or they don't have a hefty down to cover the depreciation.


If you are interested in financing definitely do it thru the credit union as others have suggested. The rates are normally unbeatable and if you are interested in the extra coverages also get those thru the credit union as well. Gap alone at a dealership can range from $600 on up and the credit union usually offers it for much less.

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